Jeff Smith purchased a new $3,150,000 five-year class asset on September 15, 2022. The asset was placed in service for business October 10, 2022. Assume this was the only asset purchased in 2022. Jeff elected to take the maximum Section 179 expense deduction allowed but elected NOT to take additional first-year (bonus) depreciation. Jeffs taxable income for 2022 before the cost recovery on this asset was $600,000.

Jeff sold the asset August 30, 2023 (during year 2). Selling price was $2,500,000.

a. What is the amount of regular (statutory) depreciation Jeff can take in 2023 (year 2)?

b. What is Jeffs adjusted basis after the 2023 (year 2) cost recovery?

c. What is Jeffs taxable gain or loss?